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Interview with Franklin D Frith II, CEO of Human Resources Mexico

Franklin, thank you for joining us! Can you explain briefly what Human Resources Mexico does, and what your role entails?

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Human Resources Mexico S de RL provides foreign companies with the means of hiring employees in Mexico without a legal entity in Mexico. We manage all payroll, human resources, employment issues, and provide cars, homes, offices, computers, cell phones, and more for the employees to accomplish their goals in Mexico. As General Manager, I am responsible for all day to day operations of Human Resources Mexico S de RL – The Most Trusted PEO in Mexico for over 10 years.

Mexico is known for its manufacturing and petroleum industries, but what other high growth areas should foreign investors be interested in?

Mexico is turning out more engineering students that most other countries in the world. The software, artificial intelligence, and aerospace industries are gaining a lot of traction. Infrastructure relating industries are also seeing an increase in activity.

Mexicans are actually returning to Mexico from the US at a higher rate than they are leaving Mexico for the US. What impact are these movements having on the availability of in-demand and high value skills in the Mexican workforce?

Most of the higher educated employees that we see in Mexico are people who live and study in Mexico. Many people returning to Mexico from abroad are low skilled workers.

Tensions between the US and Mexico have been high in the past couple of years. What challenges has this created for foreign companies looking to do business in Mexico, and what are some of the best ways to overcome these issues?

The biggest challenge facing foreign companies looking to expand in Mexico is the difference in Labor and Tax laws compared to other countries. Many foreign companies desiring to expand to Mexico try to bring their laws, rules, and business culture with them. This can end up costing foreign companies a lot of money.

It does not seem to be common knowledge that Mexico has the 15th largest GDP in the world, making it a major global economy. What other misconceptions are there about doing business in Mexico?

After successfully navigating business in Mexico for over 10 years, I would say that the biggest misconception of Mexico is that people think that there are few skilled employees in Mexico. Mexico has one of the largest engineering student rates in the world.

Some companies may have trust issues when it comes to hiring employees in Mexico. Can you explain some of the safeguards that foreign investors can employ when looking to establish or enhance their workforce in Mexico?

If a foreign company does NOT plan on using a PEO (Professional Employer Organization in Mexico) to get started with their hiring, it is extremely important that the foreign company engage a very good Mexican labor law firm and CPA firm to make sure they navigate the laws, rules, regulations, and business culture practices. This will ultimately save untold amounts of money spent on mistakes.

In five years’ time, what do you think will be the industry with the best opportunities for foreign investors?

Based on over a 10 year track record in Mexico, I would say that engineering, and technology are the biggest opportunities for foreign investors.

How easy is it for foreign companies to establish a legal presence in Mexico? What are the available options for the short- and long-term?

Establishing a legal presence in Mexico as a foreign entity is not quick and easy. Establishing a Mexican legal entity can take up to 3 months between the legal paperwork, visas, bank accounts, etc. The ongoing compliance issues are the biggest challenge to foreign companies trying to do business in Mexico. Engaging the right partner from the beginning is extremely important for the short and long term strategy of the new company.

Traditionally, Mexican business culture has shunned technology in favor of in-person meetings and transactions. Do you see this culture shifting as technology develops, or is this something a foreign business will have to accommodate for when they set up in Mexico?

We have seen a very big change in Mexico over the past 5 years relating to business technology. With the wide use of smart phones, basically everyone is becoming accustomed to long distance business meetings and using technology to communicate. This is almost a NON issue at this point.

If you had to pinpoint the next big growth opportunity in Mexico, what would it be?

Engineering and Software for artificial intelligence platforms.

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